Debt Snowball Calculator

This debt snowball calculator illustrates by way of a schedule two main debt reduction strategies: the debt snowball method and the debt avalanche method. You can also produce a debt balance chart from this calculator.

Our debt snowball calculator shows the amount of time you could save paying off debts, as well as the money saved. It uses the rollover method. This is how this method works – you pay off a smaller debt, then that payment amount is attached to the next smallest debt. As a debt is repaid, the debts are eliminated in ascending size.

How to use

  1. Give each entry a name, such as the loan company or credit cards
  2. Input the interest rate and how much you currently owe
  3. Put in the minimum payment
  4. Decide on a payoff strategy and select – see notes on potential strategies below
  5. Click "Add Debt" and this will add another debt to the calculator
  6. Look at the results section to look at payoff dates. If you want to pay off more then you can add an "Extra Payment" to update results.

Potential Strategies

Pay off the lowest balance first ( AKA Debt Snowball ). This means you pay off the lowest debt. You feel great about the fact that a debt disappears from your list. Dave Ramsey states that this psychological effect helps to build a momentum and you experience success.

Pay off the highest interest rate first ( AKA Debt Avalanche ). This makes financial sense, but psychologically doesn't have the same effect. If your highest debt is also your highest loan then it can take much longer for a debt to disappear off your list. Use the calculator to assess the difference in these methods. If you need a boost, then the first method may work better for you.

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Debt Snowball Calculator

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Use the form above to add a new debt.

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Benefits of the Snowball Technique

Financial writer Dave Ramsey has made this technique more popular over recent years. Motivation is a big factor in paying off debt. This will help you to cross debts off your list and feel good about the results. Once you pay off a loan with the smallest balance, then you can apply that payment to the next smallest. In turn, you eliminate debts from your portfolio. This motivates you to pay off the next one – and so on..

Benefits of the Avalanche Technique

This works on a different principle. The debt with the highest interest rate costs you the most money. The avalanche technique targets this first – and not the smallest balance.

If you have the motivation already, and feel that you don't need that push from the snowball technique, then this can work for you. Many cards accrue compound interest (interest on the interest) so you are best served paying them off. In the long term, this saves you money because you eliminate the highest interest items first.

Conclusion

You have a choice to make. One technique or the other might work better for you. Our Debt Snowball Calculator will help you understand this and forecast the effect of your payoffs. All financial experts state that the debt snowball plan is a great way to get debt repaid rapidly and methodically.

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